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Can Active Labor Market Policy Be Counter-Productive?

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  • Saint-Paul, Gilles

    (Paris School of Economics)

Abstract

We study active labor market policies (ALMP) in a matching model. ALMPs are modelled as a subsidy to job search. Workers differ in their productivity, and search takes place along an extensive margin. An additional job seeker affects the quality of unemployed workers. As a result, the Hosios conditions are no longer valid. To replicate the optimum the worker share in bargaining must exceed the Hosios level, and one must impose a tax on job search activity. The coalition in favor of ALMP is also studied.

Suggested Citation

  • Saint-Paul, Gilles, 2014. "Can Active Labor Market Policy Be Counter-Productive?," IZA Discussion Papers 8551, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8551
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    References listed on IDEAS

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    Cited by:

    1. Francesc Obiols-Homs & Virginia Sánchez-Marcos, 2022. "Labor Force Participation, Wages and Turbulence," Working Papers 1347, Barcelona School of Economics.
    2. Etro, Federico, 2017. "Research in economics and macroeconomics," Research in Economics, Elsevier, vol. 71(3), pages 373-383.
    3. Etro, Federico, 2015. "Research in economics and political economy," Research in Economics, Elsevier, vol. 69(3), pages 261-264.

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    More about this item

    Keywords

    active labor market policy; matching models;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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